It will not surprise you that they oppose, arguing that SCO is entitled to neither, that its position is ludicrous:

After having first lost on summary judgment, then contending in the Tenth Circuit that it should be given the chance to present its claims to a jury in order to obtain from the jury (rather than the Court) an answer to the foregoing question, and having had full opportunity to present its best case to the jury, SCO now asks the Court to reject and turn aside the jury's verdict because SCO does not like the answer. Judge Kimball found in favor of Novell on summary judgment, the Tenth Circuit reversed that ruling with respect to transfer of the UNIX and UnixWare copyrights, but acknowledged that Novell had "powerful arguments" on its side, and now a jury of twelve Utah citizens has found unanimously that the amended Asset Purchase Agreement did not transfer the copyrights from Novell to SCO. See The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1215 (10th Cir. 2009) ("We recognize that Novell has powerful arguments to support its version of the transaction, and that, as the district court suggested, there may be reasons to discount the credibility, relevance, or persuasiveness of the extrinsic evidence that SCO presents."). In light of that history, SCO's assertion that the jury's verdict is unreasonable and overwhelmingly against the weight of the evidence is ludicrous.

05/11/2010 - 873 - MEMORANDUM in Opposition re 871 MOTION for Judgment as a Matter of Law OR A NEW TRIAL filed by Counter Claimant Novell, Inc., Defendant Novell, Inc.. (Brennan, Sterling) (Entered: 05/11/2010)

Here's our text version, but for anything that matters, go by the PDF. We strive for accuracy, but we're only human, and this isn't an official text version:

**********************************************

WORKMAN|NYDEGGER A Professional Corporation
Sterling A. Brennan (Utah State Bar No. 10060; Email: [redacted])
David R. Wright (Utah State Bar No. 5164; Email: [redacted])
Kirk R. Harris (Utah State Bar No. 10221; Email: [redacted])
Cara J. Baldwin (Utah State Bar No. 11863; Email: [redacted])
[address, phone, fax]

MORRISON & FOERSTER LLP
Michael A. Jacobs (Admitted Pro Hac Vice; Email: [redacted])
Eric M. Acker (Admitted Pro Hac Vice; Email: [redacted])
Grant L. Kim (Admitted Pro Hac Vice; Email: [redacted])
Daniel P. Muino (Admitted Pro Hac Vice; Email: [redacted])
[address, phone, fax]

Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc.

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff,

v.

NOVELL, INC., a Delaware corporation,
_________________

AND RELATED COUNTERCLAIMS.

________________________________

Case No. 2:04CV00139

NOVELL'S OPPOSITION TO SCO'S
RENEWED MOTION FOR
JUDGMENT AS A MATTER OF
LAW OR A NEW TRIAL

Judge Ted Stewart

TABLE OF CONTENTS

Page

II. SCO IS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW ......................... 3

A. Legal Standard........................................................................................................ 3

B. The Jury's Verdict That the Amended Asset Purchase Agreement Did Not Transfer Copyright Ownership Is Reasonable and Supported by the Evidence. ................................................................................................................ 3

1. The Asset Purchase Agreement Established That Santa Cruz Was Novell's Agent. .......................................................................................... 4

2. The Retention of Copyrights Was Authorized by the Novell Board of Directors................................................................................................. 5

3. Novell Intentionally Retained Copyright Ownership to Address Significant Business Concerns. .................................................................. 7

4. Copyright Ownership Was Not Required for Santa Cruz to Exercise Its Rights with Respect to the Acquisition of UNIX and UnixWare Technologies............................................................................. 8

a. Novell's Witnesses Confirmed That Amendment No. 2 Did Not Transfer Copyright Ownership. .............................................. 8

b. SCO's Own Witnesses Testified That the Copyrights Were Not Required. ............................................................................... 10

(i) SCO CEO Darl McBride.................................................. 10

(ii) SCO General Counsel Ryan Tibbitts. .............................. 11

c. SCO Did Not Require Ownership of the UNIX Copyrights to Protect Its Own Intellectual Property....................................... 12

d. SCO Presented No Credible Witnesses Regarding Amendment No. 2. ....................................................................... 13

e. SCO's Argument Regarding "All of Seller's Claims" Fails. ....... 13

A. Legal Standard...................................................................................................... 14

B. The Jury's Verdict Is Not "Clearly, Decidedly, or Overwhelmingly" Against the Weight of the Evidence..................................................................... 15

1. SCO's Witnesses Were Not Competent to Testify Regarding the Final Terms of the APA or Amendment No. 2. ....................................... 16

i

TABLE OF CONTENTS
(continued)

Page

2. SCO's Reliance on the "Forthright Negotiator Rule" Is Misplaced. ....... 18

3. The Technology License Agreement Does Not Change the Intent of the APA or Amendment No. 2............................................................. 20

4. SCO's "Course of Performance" Evidence Does Not Trump the Terms of the Amended APA.................................................................... 20

5. SCO Presented No Evidence Regarding Which, If Any, Copyrights Were Required for It to Exercise Its Rights. ............................................ 21

ii

TABLE OF AUTHORITIES

Page(s)

Evans v. Fogarty,
241 Fed. Appx. 542 (10th Cir. 2007) ...................................................................................... 14

Flying J Inc. v. Comdata Network, Inc.,
405 F.3d 821 (10th Cir. 2005)................................................................................................. 18

Guides, Ltd. v. Yarmouth Group Prop. Mgmt., Inc.,
295 F.3d 1065 (10th Cir. 2002)................................................................................................. 2

Holmes v. City of Massilon,
78 F.3d 1041 (6th Cir. 1996)................................................................................................... 14

M.D. Mark, Inc. v. Kerr-McGee Corp.,
565 F.3d 753 (10th Cir. 2009)....................................................................................... 2, 14, 21

Martin v. Howard Univ.,
2006 U.S. Dist. LEXIS 72303 (D.D.C. Oct. 4, 2006)............................................................... 4

Minshall v. McGraw Hill Broad. Co., Inc.,
323 F.3d 1273 (10th Cir. 2003)................................................................................................. 3

P&G v. Haugen,
627 F. Supp. 2d 1287 (D. Ut. 2008) (Stewart, J.) ............................................................. 14, 21

Reeves v. Sanderson Plumbing Prods.,
530 U.S. 133 (2000) .............................................................................................................. 3, 8

Ruffin v. Fuller,
2000 U.S. Dist. LEXIS 14619 (S.D.N.Y. Oct. 5, 2000) ................................................... 14, 21

Snyder v. City of Moab,
354 F.3d 1179 (10th Cir. 2003)....................................................................................... 2, 3, 21

Strickland Tower Maintenance, Inc. v. AT&T Communications, Inc.,
128 F.3d 1422 (10th Cir. 1997)................................................................................................. 3

The SCO Group, Inc. v. Novell, Inc.,
578 F.3d 1201 (10th Cir. 2009)......................................................................................... 1, 4, 9

iii

TABLE OF AUTHORITIES
(continued)

Page

iv

I. INTRODUCTION

"Did the amended Asset Purchase Agreement transfer the UNIX and UnixWare copyrights from Novell to SCO?" (Dkt. No 846.)

After having first lost on summary judgment, then contending in the Tenth Circuit that it should be given the chance to present its claims to a jury in order to obtain from the jury (rather than the Court) an answer to the foregoing question, and having had full opportunity to present its best case to the jury, SCO now asks the Court to reject and turn aside the jury's verdict because SCO does not like the answer. Judge Kimball found in favor of Novell on summary judgment, the Tenth Circuit reversed that ruling with respect to transfer of the UNIX and UnixWare copyrights, but acknowledged that Novell had "powerful arguments" on its side, and now a jury of twelve Utah citizens has found unanimously that the amended Asset Purchase Agreement did not transfer the copyrights from Novell to SCO. See The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1215 (10th Cir. 2009) ("We recognize that Novell has powerful arguments to support its version of the transaction, and that, as the district court suggested, there may be reasons to discount the credibility, relevance, or persuasiveness of the extrinsic evidence that SCO presents."). In light of that history, SCO's assertion that the jury's verdict is unreasonable and overwhelmingly against the weight of the evidence is ludicrous.

Rule 50 of the Federal Rules of Civil Procedure allows a court to grant judgment as a matter of law only if the evidence is "so overwhelmingly preponderant in favor of the movant [in

1

SCO's motion ignores testimony that contradicts its position, including former SCO CEO Darl McBride's admission that copyrights were not required for SCO's UNIX and UnixWare software businesses, and SCO General Counsel Ryan Tibbitts's admission that SCO itself attempted to sell its software business while excluding the copyrights. SCO asks the Court to make credibility determinations that the jury has already made, weigh evidence that the jury has already considered and weighed, and draw all inferences in favor of SCO. As this Court has noted, however, it is inappropriate for a trial court to do so in considering a Rule 50 Motion. See Dkt. 838 at 3; see also Guides, Ltd. v. Yarmouth Group Prop. Mgmt., Inc., 295 F.3d 1065, 1074 (10th Cir. 2002) (stating that for Rule 50(b) motion, courts construe all inferences in favor of nonmoving party and "refrain from making credibility determinations or weighing the evidence.").

SCO also relies on a parade of witnesses with limited knowledge and memory, many of whom have an admitted financial bias towards SCO. By contrast, Novell relied at trial on the governing language of the Asset Purchase Agreement and its amendments, and the testimony of the individuals who actually negotiated and drafted that language (including Tor Braham, the primary drafter of the APA, and Allison Amadia, the primary drafter of Amendment No. 2). The jury plainly decided that the language of the amended Asset Purchase Agreement supported Novell's position, Novell's witnesses were more credible, and Novell's other evidence was more probative. There is no basis whatsoever for second-guessing those determinations.

SCO's disagreement with the jury's verdict cannot justify judgment as a matter of law or a new trial. Instead, SCO must establish that the jury's verdict was entirely contrary to the

2

II. SCO IS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW

A. Legal Standard.

Judgment as a matter of law is warranted only if the evidence points but one way and is susceptible to "no reasonable inferences supporting the party opposing the motion," such that the evidence is "so overwhelmingly preponderant in favor of the movant as to permit no other rational conclusion." Snyder v. City of Moab, 354 F.3d 1179, 1184 (10th Cir. 2003); Strickland Tower Maintenance, Inc. v. AT&T Communications, Inc., 128 F.3d 1422, 1426 (10th Cir. 1997). When ruling on a motion for judgment as a matter of law, the court does not weigh the evidence, pass on the credibility of the witnesses, or substitute its conclusions for that of the jury. Minshall v. McGraw Hill Broad. Co., Inc., 323 F.3d 1273, 1279 (10th Cir. 2003) (quoting Medlock v. Ortho Biotech, Inc., 164 F.3d 545, 549 (10th Cir. 1999)). In fact, the Supreme Court has held that "although [a] court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe." Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 151 (2000).

B. The Jury's Verdict That the Amended Asset Purchase Agreement Did Not
Transfer Copyright Ownership Is Reasonable and Supported by the
Evidence.

The jury was presented at trial with two competing interpretations of the Novell-Santa Cruz transaction. SCO argued that the deal was essentially an acquisition of the entire UNIX and UnixWare business, transferring all relevant assets, including copyright ownership. Novell, on the other hand, presented evidence that the final deal was more limited, with Novell transferring the UnixWare business to Santa Cruz but retaining substantial rights in the UNIX licensing business, including continued ownership of the existing UNIX and UnixWare copyrights and the undisputed right to receive UNIX royalties. The jury was presented with

3

1. The Asset Purchase Agreement Established That Santa Cruz Was Novell's Agent.

Consistent with the foregoing, Alok Mohan, CEO of Santa Cruz in 1995 when the APA was executed, characterized the deal with Novell in an email to all Santa Cruz employees on September 19, 1995, explaining that Santa Cruz became "the owner of the UnixWare product line" but would merely "manage the licensing business for UNIX prior to UnixWare 1.0 (SVRx)." (Trial Ex. 163 at 1.) This is not the sort of language that describes an acquisition of

4

This agency relationship, along with other provisions in the APA such as the Excluded Assets Schedule, demonstrates why SCO's continued reliance on the broad definition of "Business" and the broad language "all rights and ownership" in the Asset Purchase Agreement is misplaced. (See Motion at 4-5.) It is undisputed, and was made abundantly clear through trial, that these broad introductory statements are explicitly limited in many ways. For example, in addition to copyrights, Novell retained all patents, certain royalties, and numerous other rights and assets as enumerated throughout the APA. The evidence on which the jury reasonably relied demonstrated that this transaction was not a full acquisition of a business and all related assets, but instead a carefully crafted purchase agreement that purposefully transferred only certain enumerated assets and rights.

2. The Retention of Copyrights Was Authorized by the Novell Board of Directors.

David Bradford, Secretary to the Board of Directors and General Counsel for Novell for nearly 15 years including at the time of the APA and Amendment No. 2, prepared the Board minutes. (March 2010 Trial Tr. at 2434:14-23.) He testified that Novell's Board of Directors approved the APA transaction with the proviso that Novell would retain all copyrights. (Id. at 2442:1-19.) If Amendment No. 2 had been intended to change this exclusion and to instead transfer copyright ownership, that would have been a

5

The Novell Board meeting minutes also demonstrate why SCO's argument that the copyright exclusion was "a mistake . . . or a last-minute, overzealous decision between Novell's general counsel and its outside counsel" is untenable. (Motion at 7.) SCO's witness Robert Frankenberg confirmed and verified the accuracy of the minutes for the September 18, 1995 Board meeting at which the APA was approved with explicit reference to the exclusion of UNIX and UnixWare copyrights, and acknowledged that he reviewed the APA's Excluded Assets schedule in connection with the transaction. (March 2010 Trial Tr. at 102:16-18, 147:10-25.) SCO's witness Ty Mattingly agreed that, before they executed the APA, the lawyers and businesspeople at Santa Cruz had the opportunity to read the Included Assets and Excluded Assets schedules. (Id. at 344:20-24.) SCO's witness Burt Levine even made comments on the draft schedules and crossed out an item immediately above the copyright exclusion in Schedule 1.1(b), all while leaving that exclusion intact. (Id. at 531:22-537:23; Trial Ex. X3.)

Amendment No. 1 provides additional evidence supporting the jury's determination that the retention of copyright ownership was both intended and authorized by Novell. Three months after the initial signing, after careful review by both sides, the parties executed a lengthy clean-up amendment, titled Amendment No. 1. (Trial Ex. T5.) Amendment No. 1 did not add copyrights to the Included Assets that would be transferred, nor did it remove copyrights from the Excluded Assets that would not be transferred. (Id.) SCO's witness Mr. Frankenberg agreed that "even after the Board meeting that was held at which the Asset Purchase Agreement was approved, after [he] and other members of the Board had a chance to thoroughly review the [APA], and even after Mr. Sonsini [senior partner of the Wilson Sonsini law firm and member of Novell's Board] and Mr. Bradford, the legal advisors, apprised the Board about what was contained in the agreement and even after a nearly three-month period to review it, neither

6

3. Novell Intentionally Retained Copyright Ownership to Address Significant Business Concerns.

Mr. Braham and Mike DeFazio, former head of the UNIX and UnixWare business at Novell, agreed that the copyright exclusion was designed to protect Novell's interests. Mr. Braham testified that Novell's concerns included its important interest in retaining the UNIX business, possible SCO bankruptcy, and a strategic concern that Microsoft was monopolizing the area. (Id. at 2364:3-15, 2425:16-2426:15.) Mr. DeFazio added that the retention of copyrights was crafted to "bulletproof" Novell's financial asset stream. (Id. at 2311:7-17.)

Similarly, Novell's witness James Tolonen, Novell's CFO during the relevant time, testified that copyrights were purposefully excluded (1) as part of an overall strategy to retain ownership of the original software, (2) because Santa Cruz was relatively small and could not afford to pay Novell the entire value for all UNIX and UnixWare-related rights and assets, and (3) because Novell was concerned about the long-term viability of Santa Cruz and wanted to ensure Novell's rights would not be brought into question if Santa Cruz was acquired by a competitor. (Id. at 2021:24-2023:18.) Mr. Tolonen made several presentations to the Novell Board describing the APA process, and SCO's witness Mr. Frankenberg confirmed that he relied on Mr. Tolonen's recommendations and advice. (Id. at 124:15-125:2, 2025:7-2026:10.)

SCO's argument that the inclusion of copyrights in the sale was "logical" is irrelevant. (See Motion at 6.) The inclusion of patents may also have been logical, but they were expressly

7

4. Copyright Ownership Was Not Required for Santa Cruz to Exercise Its Rights with Respect to the Acquisition of UNIX and UnixWare Technologies.

a. Novell's Witnesses Confirmed That Amendment No. 2 Did Not Transfer Copyright Ownership.

8

In fact, Ms. Amadia initially received a draft of Amendment No. 2 from Mr. Sabbath that would have revised Schedule 1.1(b), but Novell rejected the proposed language because Novell did not want to alter the APA to transfer the UNIX copyrights to SCO. (Id. at 2120:3-14.)

Mr. Sabbath's proposed revision of Schedule 1.1(b), had it been accepted, would have excluded "[a]ll copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of this Amendment No. 2, which pertain to the UNIX and UnixWare technologies and which SCO has acquired hereunder." (Trial Ex. T34 at 1.) But Ms. Amadia told Mr. Sabbath that Novell would not alter the original APA to transfer copyright ownership, and she further said that she could only modify the language to "affirm the rights that [Santa Cruz] acquired in terms of license grants and rights to use the technology." (March 2010 Trial Tr. at 2120:23- 2121:4.) Ms. Amadia prepared such a revision, and her revised language became the final language of Amendment No. 2. (Id. at 2121:3-2123:5.)

Ms. Amadia also testified that, if she were drafting an amendment to the APA under which the copyrights transferred, she "would have definitely amended Schedule 1.1(a), which listed the Included Assets," but she did not do that. (Id. at 2160:21-24.) Likewise, Mr. Tolonen agreed that the way to transfer the copyrights would have been to include them on the schedule of Included Assets. (Id. at 2037:18-25.) This did not occur.

SCO takes quotes from Novell's witness Allison Amadia out of context to argue that her testimony is consistent with its position that copyright ownership transferred. But Ms. Amadia was clear in her testimony that she was not discussing the transfer of copyright ownership, but

9

b. SCO's Own Witnesses Testified That the Copyrights Were Not Required.

(i) SCO CEO Darl McBride.

10

Mr. McBride testified only that SCO was only unable to "run [its] business for the licensing side" without the copyrights. (Id. at 1226:2-3.) He asserted that the copyrights were needed for SCO's new business of licensing -- and, if necessary, suing -- Linux users. (Id. at 1226:1-10.) But SCO presented no evidence that suing Linux users was part of the "rights" transferred under the APA. Rather, even SCO's witnesses testified that the APA was intended to enable Santa Cruz to develop a new version of UnixWare that could compete with Microsoft Windows. (Id. at 91:7-13; 92:20-93:1 (Robert Frankenberg); 224:23-225:25 (Duff Thompson); see also 429:2-10 (Jack Messman).)

(ii) SCO General Counsel Ryan Tibbitts.

11

c. SCO Did Not Require Ownership of the UNIX Copyrights to Protect Its Own Intellectual Property.

Consistent with Mr. McBride's testimony discussed above, SCO's witness Kim Madsen testified that for 12 years prior to the APA, Santa Cruz successfully distributed the OpenServer flavor of UNIX and developed a substantial business around that flavor without owning the copyrights in the underlying UNIX code. (Id. at 816:19-817:1, 817:7-14, 869:10-14.) Ms. Madsen agreed that through the APA, Santa Cruz acquired another flavor of UNIX: UnixWare. (Id. at 869:15-19.) This testimony supports Novell's position on the APA, with

12

d. SCO Presented No Credible Witnesses Regarding Amendment No. 2.

Ms. Madsen testified that she had only a general memory of the execution of Amendment No. 2, and did not have any specific recollection of discussions with Mr. Sabbath. (Id. at 802:14-22.) She "reviewed and commented" on the language of Amendment No. 2, and in response to a question asking whether she had a view in 1996 about what copyrights were "required" for Santa Cruz to operate its UNIX and UnixWare business, responded only: "We would have acquired all the copyrights." (Id. at 802:17-803:1.)

e. SCO's Argument Regarding "All of Seller's Claims" Fails.

13

Furthermore, SCO cannot prevail on such a theory suggested after the trial because it presented no evidence at trial that Novell has any "claims" that SCO is entitled to pursue. The only evidence SCO presented on this point at trial was testimony that the enumerated assets Novell actually sold to Santa Cruz included "legal claims that it would have against parties that were connected with the business." (March 2010 Trial Tr. at 248:20-249:23 (Duff Thompson).) However, SCO did not carry its burden of establishing that there were any such Novell "legal claims."⁹

III. SCO IS NOT ENTITLED TO A NEW TRIAL

A. Legal Standard.

As this Court has held, motions for a new trial under Rule 59(a) are "generally not regarded with favor and granted only with great caution. The party seeking to set aside a jury verdict must show either trial error which constitutes prejudicial error or that the verdict was not based on substantial evidence." P&G v. Haugen, 627 F. Supp. 2d 1287, 1296 (D. Ut. 2008) (Stewart, J.) (denying motions for judgment as matter of law and new trial) (quoting Smith v. Cochran, 182 Fed. Appx. 854, 864 (10th Cir. 2006)). Put another way, new trial motions are granted to avoid "miscarriage of justice." Ruffin v. Fuller, 2000 U.S. Dist. LEXIS 14619, at *2 (S.D.N.Y. Oct. 5, 2000) (citing United States v. Landau, 155 F.3d 93, 104 (2d Cir. 1998)). Where a new trial motion asserts that the jury verdict is not supported by the evidence, the verdict must stand unless it is clearly, decidedly, or overwhelmingly against the weight of the

14

B. The Jury's Verdict Is Not "Clearly, Decidedly, or Overwhelmingly" Against
the Weight of the Evidence.

SCO does not assert that there were any prejudicial errors on the part of the Court.

Instead, SCO stands solely on the argument that the jury verdict is not supported by the evidence. SCO argues that the "overwhelming weight of the evidence" is that the UNIX copyrights were intended to be transferred. This is false, as demonstrated by the same evidence set out above with respect to SCO's Rule 50 Motion. Novell presented key witnesses with knowledge of the APA and involvement in the final negotiation and drafting of its terms, and put forth the only witnesses who testified credibly as to the interpretation of Amendment No. 2. SCO did not point to any financial stake of those witnesses in the outcome of the trial.

In addition, the jury was reasonable in its determination that Novell's witnesses and evidence were more credible than SCO's witnesses and evidence. SCO's evidence included its "total of ten witnesses" who testified as supposed support for SCO's position. (Motion at 19.) SCO mistakes quantity of testimony with quality of testimony, a distinction that was not lost on the jury. Indeed, the jury was instructed -- without objection by SCO -- that numerosity of witnesses is not determinative. (See Jury Instruction No. 12 ["To prove by a preponderance of the evidence means to prove something is more likely so than not so. It does not mean the greater number of witnesses or exhibits."]) SCO presented witness after witness with little or no

15

1. SCO's Witnesses Were Not Competent to Testify Regarding the Final Terms of the APA or Amendment No. 2.

Even with respect to the only subject on which all ten of the witnesses were able to testify -- the original APA -- their knowledge and credibility were suspect.

• Robert Frankenberg admitted that his belief that copyrights were not meant to be retained by Novell was "something in [his] mind" that was different than the words in the APA and that he "should have read more carefully or clearly or we might not have been here." (Id. at 2551:18-2552:2, 178:2-3.)

• Duff Thompson was not on the Novell Board of Directors, nor was he present at the Novell Board meeting where the APA was approved; he had decided to leave Novell before beginning work on this transaction; he was a member of the SCO Board that made the decision to file this lawsuit; and he admitted that he has a financial interest in this case. (Id. at 279:1-11, 280:5-11, 282:4-13, 285:14-22, 302:12-303:9.)

• Ed Chatlos was not at the Novell Board meeting in September 1995 when the APA was approved including the exclusion of copyrights, and does not know what was discussed; and his wife is an employee of SCO who could make money if SCO prevails in this lawsuit. (Id. at 374:8-375:11, 383:23-384:22.)

16

• Ty Mattingly acknowledged that he did not "write or craft" any provisions of the APA, did not participate in any "wordsmithing," "did not make any contribution whatsoever to the terms or conditions" of the APA, that his "high-level strategy involvement" took place at least two to three weeks before the agreement was signed, and he did not remember who was present or what was said at the Board meeting at which the APA was approved. (Id. at 714:14-25, 715:1-5, 737:9- 740:8.) Mr. Mattingly is also a SCO stockholder who owns over 9,000 SCO shares. (Id. at 701:12-20.)

• Burt Levine claimed that he would not have left intact the copyright exclusion in Schedule 1.1(b) of the APA, but then admitted when faced with his own handwriting that he had reviewed and commented extensively on drafts of Schedules 1.1(a) and 1.1(b), even crossing out the item directly above the copyright exclusion language, and did not add copyrights to the Included Assets or remove copyrights from the Excluded Assets. (Id. 531:22-537:23; Trial Ex. X3.)

• Alok Mohan's involvement was "only at a high level"; he was not involved in the drafting of the APA or the "detail level of negotiations"; he did not participate in the meetings occurring between the respective parties drafting the document; and he agreed that when contract disputes arise, the contract is the best evidence of the parties' rights and obligations under the deal. (March 2010 Trial Tr. 456:7-17, 473:2-13, 474:18-475:19.)

• Jim Wilt became less active as the negotiations progressed and had no recollection of anyone saying whether the copyrights would be included or excluded from the transaction. (Id. at 442:11-444:8.)

• Kim Madsen had no involvement in the drafting of the APA or Amendment No. 2, no specific memory of the intent or negotiation of Amendment No. 2, and

17

no specific recollections of discussions with Steve Sabbath about Amendment No. 2. (Id. at 802:17-22.)

• Steve Sabbath admitted executing a declaration that conflicted with much of his later testimony, including statements such as "Schedule 1.1(b) of the APA provided that much of the UNIX System V intellectual property would not be transferred to Santa Cruz" and that SCO's claims were "incorrect . . . Novell retained certain rights under the UNIX System V licensing agreements as well as certain UNIX System V intellectual property." (Id. at 927:4-928:18.) His explanations were, "I don't have any skin in the game. I wasn't that interested. Okay? I was being lazy," and that the earlier declaration was "close enough for government work." (Id. at 926:17-927:3, 928:19-929:2.)

• Doug Michels repeatedly emphasized his lack of knowledge about the APA and Amendment No. 2, stating "I have no memory specific to any specific agreement," "I don't even know what Amendment No. 2 is," and "I didn't read [the APA] then, and I haven't read it recently. I've never read it through. I'm not a lawyer, and I have no comment about the Asset Purchase Agreement." (Id. at 494:14, 511:15, 512:13-15.)

2. SCO's Reliance on the "Forthright Negotiator Rule" Is Misplaced.

18

Even assuming the applicability of the "forthright negotiator rule," Ms. Amadia's testimony demonstrates that the elements of the doctrine fail with respect to both parties. At the time of the agreement, Novell (Party 1) had no reason to know that Santa Cruz (Party 2) believed that there was a disagreement as to the meaning of the term; Ms. Amadia believed that Mr. Sabbath was satisfied the amendment gave the assurance that Santa Cruz had the rights it needed to go forward. Conversely, Santa Cruz (Party 2) was made aware immediately by Novell (Party 1) that Novell would not execute an amendment that transferred copyright ownership, and Ms. Amadia explicitly rejected a draft amendment sent by Mr. Sabbath that seemed to be suggesting such a transfer. (Trial Ex. T34 at 1.)

SCO's claim that Ms. Amadia knew Mr. Sabbath had a different view of the meaning of Amendment No. 2, and was thus allegedly not being a "forthright negotiator," is a gross mischaracterization of her testimony. SCO accurately cites Ms. Amadia as agreeing that Mr. Sabbath expressed that "the purpose of the Amendment was to clarify that the UNIX and UnixWare copyrights had transferred," but SCO inexplicably removes in its Motion the first part of this question, stating that this view was only "initially in the beginning of the discussions." (Motion at 19, March 2010 Trial Tr. at 2169:20-2170:1.) Indeed, Ms. Amadia testified that "after he executed Amendment Number 2," Mr. Sabbath "thought he got what he needed, which would clear license rights to go forward, to use the code, to develop it to, you know, own modifications to it, to do all of the things they intended to do to acquire the assets." (March 2010 Trial Tr. at 2169:6-13.) Ms. Amadia further testified that Mr. Sabbath proposed a draft, and she subsequently had conversations with him about it, stating: "[W]e were not going to alter the

19

3. The Technology License Agreement Does Not Change the Intent of the APA or Amendment No. 2.

4. SCO's "Course of Performance" Evidence Does Not Trump the Terms of the Amended APA.

20

5. SCO Presented No Evidence Regarding Which, If Any, Copyrights Were Required for It to Exercise Its Rights.

IV. CONCLUSION

21

DATED: May 11, 2010

Respectfully submitted,

By: /s/ Sterling Brennan
WORKMAN NYDEGGER
MORRISON & FOERSTER LLP

Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc.

22

¹ See March 25, 2010 Jury Instruction Conference Tr. at 46:24-25 (SCO agreeing to the verdict form as is). Indeed, Novell objected that this approach would prevent the jury from addressing the other elements of the slander of title claim. (Id. at 47:1-48:4.) The Court stated that the jury would need to make the initial determination of copyright ownership in order to perform its responsibility. (Id. at 48:5-9.) See also March 2010 Trial Tr. at 2632:2-5 (SCO's counsel stating in closing argument: "The very first question will be did the amended Asset Purchase Agreement transfer [] UNIX and UnixWare copyrights from Novell to SCO. I would like to address that question at the outset.").

² SCO argues that various APA provisions must be interpreted in accordance with statements plucked out of the text of the Tenth Circuit opinion. (See, e.g., Motion at 6, 9, 10, 12, 13, 21, 19 n.13.) The purpose of a Rule 50(b) motion is to determine whether the jury verdict was supported by the evidence presented at trial. See, e.g., Martin v. Howard Univ., 2006 U.S. Dist. LEXIS 72303, at *17-18 (D.D.C. Oct. 4, 2006). The Tenth Circuit opinion is not evidence on factual questions of ownership, nor does it contain binding conclusions on copyright ownership issues. The Tenth Circuit was careful to state: "We take no position on which party ultimately owns the UNIX copyrights or which copyrights were `required' for Santa Cruz to exercise its rights under the agreement. Such matters are for the finder of fact on remand." The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201, 1219 (10th Cir. 2009). If SCO believed the jury needed to interpret a particular provision in light of the Tenth Circuit opinion, the appropriate measure would have been to seek corresponding jury instructions.

³ SCO attempts to minimize the import of the Novell Board meeting minutes by arguing that the Board's action "did not constitute negotiations of the agreement between the parties." (Motion at 19 (emphasis in original).) This argument is beside the point. SCO's entire case has rested on what the parties intended; in fact, this very argument in SCO's Motion falls under the heading "The Intent of the Negotiators and Principals Regarding the APA." The Board minutes reflect the intent of the actual party to the transaction--Novell--as opposed to the vague memories of select individuals within Novell reported 15 years later.

⁴ Mr. Braham was praised by SCO's own witnesses. Ty Mattingly testified that Mr. Braham was "the main guy," "entrusted," and would better know what was actually written in the final version of the agreement. (March 2010 Trial Tr. at 716:10-14, 755:10-15.) Duff Thompson stated that he had confidence in Novell's outside counsel, which included Tor Braham. (Id. at 290:8-9.)

⁵ SCO's argument that Amendment No. 2 must not have excluded copyright ownership because it included the trademarks UNIX and UnixWare is similarly misguided. The trademarks UNIX and UnixWare were explicitly listed as Included Assets even in the original APA.

⁶ As SCO's witness William Broderick explained, licensees executed licensing agreements and software agreements, which allowed a licensee to create a flavor of UNIX, and sublicensing agreements that allowed a licensee to market the flavored UNIX product. (Id. at 583:4-17).

⁷ Dr. Christine Botosan, one of SCO's damages experts, also testified that the SCOsource licensing program was a new "product" for SCO for which there was no "previous history" to look at. (Id. at 1447:5-8; 1448:3-5; 1449:8-11; 1453:20-24.)

⁸ SCO's argument that the majority of UnixWare is older UNIX code is both misleading and irrelevant. SCO's witness Andrew Nagle acknowledged that he had no estimate of the amount of code Santa Cruz and SCO contributed to the UnixWare product, and would not be surprised if Santa Cruz and SCO had added seven million lines of code on top of the seven million lines of code that existed in 1995. (Id. at 1773:10-21.) Regardless, whether the portion of code created by SCO makes up 10% or 50% of the product, it is undisputed that SCO owns the copyrights in the code it creates and can protect those rights without owning the UNIX copyrights.

⁹ SCO's references to claims that it pursued post-closing against Microsoft and its allegations of copyright infringement against Linux users are not pertinent. (Motion at 13 n.10.) These are claims created by SCO, not Novell, and thus are not "Seller's claims." They are self- serving positions taken by SCO (in the Microsoft example, litigation-drawn hearsay) and only "expressly refer[] to ownership of copyrights" because SCO claimed to own the copyrights. Neither has any bearing on the negotiated terms of the APA.

¹⁰ SCO suggests that new trial grants are "virtually unassailable" on appeal (Motion at 14). In fact, the Tenth Circuit has cautioned that, while the standard of review if a new trial motion is denied is narrow, "a more searching inquiry is required" if a trial court grants a motion for a new trial "because of the concern that a judge's nullification of the jury's verdict may encroach on the jury's important fact-finding function," particularly where, as here, the motion is on the ground that the verdict is against the weight of the evidence. Evans v. Fogarty, 241 Fed. Appx. 542, 550 (10th Cir. 2007) (reversing district court's grant of new trial because there was sufficient evidence to support jury verdict) (quoting Hutchinson v. Stuckey, 952 F.2d 1418, 1421 (D.C. Cir. 1992)); accord Holmes v. City of Massilon, 78 F.3d 1041, 1047 (6th Cir. 1996). SCO ignores this distinction in the cases it cites. Indeed, nine of the ten cases it cites for its argument as to the deference granted a district court under Rule 59 involve denials, rather than grants, of motions for a new trial. (Motion at 14-15.)

¹¹ In any event, the parties expressly agreed in the APA that they "waive[d] the application of any law, regulation, holding, or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document." (Trial Ex. A1 at 47-48 (Section 9.9).) Ambiguities thus cannot be construed against Novell on account of Ms. Amadia's role as drafter of the final language of Amendment No. 2.